Morgan Stanley beats estimates on better-than-expected outcomes on Wall Avenue and in wealth administration
James Gorman, Chairman and CEO of Morgan Stanley, speaks during an interview with Bloomberg Television in Beijing, China on Thursday, May 30, 2019.
Giulia Marchi | Bloomberg | Getty Images
Morgan Stanley posted fourth quarter earnings and revenue on Wednesday that exceeded analysts' expectations for strong trading, investment banking and wealth management results.
The company reported a 51% increase in earnings to $ 3.39 billion, or $ 1.81 per share, compared to an estimate of $ 1.27 by analysts surveyed by Refinitiv. Revenue of $ 13.64 billion was over $ 2 billion above the estimate of $ 11.54 billion.
"The company had a very strong quarter and record results for the full year with excellent performance in all three businesses and regions," said CEO James Gorman in the press release. "Our unique business model continues to serve us in the further implementation of our long-term strategy with the acquisitions of E * TRADE and Eaton Vance."
The bank's shares fell 1.75% in premarket trading.
Expectations were high after robust trade and investment banking results at rivals Goldman Sachs and JPMorgan Chase helped boost profitability, and Morgan Stanley did not disappoint.
Investment banking had sales of $ 2.3 billion, half a billion dollars more than FactSet's survey of $ 1.81 billion.
Stock trading generated sales of $ 2.49 billion, $ 350 million more than the estimate of $ 2.14 billion. Fixed income trading grossed $ 1.66 billion, $ 200 million more than analysts expected.
The company's wealth management division posted $ 5.68 billion in revenue, nearly $ half a billion more than analysts expected, thanks to higher asset levels and fee-generating activity, as well as the impact of the e-trade deal.
Morgan Stanley has the largest wealth management business of the six largest US banks, which typically benefit from rising markets. That business is backed by the bank's $ 13 billion acquisition of E-Trade, which was announced a year ago. The fourth quarter is the first period in which E-Trade will be integrated into the larger company.
Investment management revenue of $ 1.1 billion exceeded analysts' estimate of $ 1.02 billion.
Morgan Stanley is the last major US bank to post profits in the fourth quarter. JPMorgan and Goldman Sachs beat analysts' expectations for sales and earnings aided by trading, while Citigroup, Wells Fargo and Bank of America were disappointed with sales as credit margins were squeezed.
The shares of New York-based Morgan Stanley rose 33% in 2020, outperforming the KBW Bank Index's 4.3% decline.
Here are the numbers:
Earnings of $ 1.81 per share versus $ 1.27 estimate by analysts surveyed by Refinitiv.
Revenue of $ 13.64 billion versus an estimate of $ 11.54 billion.
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